Data from the Real Estate Institute of Western Australia (REIWA) has shown that 45 per cent of suburbs in Perth experienced increases in median sales prices across August.
Commenting on the data, Emma Everett, chair of property investment consultancy Momentum Wealth’s residential investment committee, said a combination of tightening sales stock and rising buyer demand and competition is pushing up prices across a growing number of Perth suburbs, as the market resumes its recovery amid the coronavirus pandemic.
Data from the REIWA showed that there was a 23 per cent decline in properties listed for sale across Perth from the same period last year, with 10,686 properties listed for sale in the week ending 20 September.
“At the same time, Perth has recorded a sustained increase in buyer activity in the months following the easing of COVID-19 restrictions, with sales activity trending 40 per cent higher in August compared to the same period in 2019, which is putting further downwards pressure on stock levels,” Ms Everett said.
“These conditions are translating into an increasingly competitive market as buyers in high-demand areas compete for a reducing pool of properties, with our buyer’s agents regularly noting higher attendance at home opens and multiple offers from buyers for high-quality stock in our preferred suburbs.”
Ms Everett noted, however, that this has not yet translated into resumed headline price growth although these conditions, combined with suburb-specific demand and supply factors, have resulted in price improvements across market segments in Perth.
She said this was especially evident in suburbs where lower stock levels and limited oncoming supply had combined with strong demand from buyers.
“While the average days on market for properties in the greater Perth region was 50 days in the three months to June 2020, we’ve seen other areas record days on market as low as 20 across the same period, particularly where these tightening stock levels have been accompanied by high online property views,” she said
The activity was largely driven by owner-occupiers and first home buyers, although Ms Everett said investors were turning their attention to the Western Australian capital as well.
“As it stands, these improvements are primarily being driven by owner-occupiers and first-home buyers; however, we are starting to see interest from investors who recognise that conditions are ripening and the market is already moving, and we expect it’s only a matter of time until others follow suit, particularly once we see broader rental growth” she said.
In the rental market, according to CoreLogic data, Perth recorded the highest annual rent increase of all capital cities across Australia in the year to July 2020, with rents rising on average 2.9 per cent, while the combined capital city average remained the same.
Momentum Wealth’s property management team leader Amanda Kroczek said that while the extension of the COVID-19 emergency period in WA meant that rent increases on existing properties were temporarily prohibited, rents were already on the rise for new tenancies.
“With rental vacancy rates reaching a 12-year low in Perth and rental stock continuing to tighten, our property managers have seen a significant rise in tenant competition on-the-ground, which in many cases is resulting in rent increases for advertised properties as tenants are offering more to secure their property of choice,” she said.
Westpac economists recently projected a 15 per cent surge in national home prices in the years to mid-2023, and expected Brisbane and Perth to lead the resurgence, with increases of 20 per cent and 18 per cent, respectively.
[Related: Value of housing stock falls by $98bn]
If you’re feeling overworked and overwhelmed in this fast-paced mortgage market, it’s time to make some changes, and the Business Accelerator Program can help! Early bird tickets are on sale now. Work smarter, not harder, this year.
Malavika Santhebennur is the features editor on the mortgages titles at Momentum Media.
Before joining the team in 2019, Malavika held roles with Money Management and Benchmark Media. She has been writing about financial services for the past six years.